Maruti Suzuki, India's leading car manufacturer, has been experiencing a surge in optimism this September, with five prominent global brokerages - Citi, Jefferies, Morgan Stanley (NYSE:MS), Bernstein, and JP Morgan - raising their target prices for the automaker. The revised targets were driven by the company's growing market share and positive comments from its management.
The brokerages adjusted their target prices as follows: Citi to 13,600 from 13,200; Jefferies to 12,000 from 11,500; Morgan Stanley to 11,963 from 11,164; Bernstein to 11,750 from 10,800; and JP Morgan to 9,200 from 8,800.
The Federation of Automobile Dealers Associations (FADA) reported a consistent increase in Maruti Suzuki's market share from April through August of this year. The firm boosted its market share from 38.9% in April to 42.4% by August.
Adding to the positive outlook for Maruti Suzuki are projections that the company's profit margins will rise year-on-year in Q2 FY24 from 9% to 11%, spurred by a stronger mix of SUVs. The management team has set an ambitious goal of capturing a third of the SUV market.
The company is also expected to outperform rivals during the upcoming festive season due to high demand for vehicles such as the Fronx, Grand Vitara, Jimmy, and Invicto.
Further plans announced by the management include doubling the annual production capacity to 40 lakh units within eight years. By FY31, Maruti Suzuki aims to triple its export volumes to 8,00,000 lakh units.
Maruti Suzuki's financial performance for the June quarter of 2023 was robust. The company posted a standalone net profit of Rs 2,485.1 crore, a significant 145.4% increase compared to the same period in the previous year. Revenue from operations for the first quarter of the current financial year was reported at Rs 32,326.9 crore, up from Rs 26,499.8 crore for the equivalent quarter a year earlier.
The firm's shares have been performing well this year, with a gain of over 24% in value compared to the Nifty's rise of just over 8%.
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